Transcript Slide 1

International Business
Chapter 3
Differences
in Culture
How Do Cultural Differences
Affect International Business?
 Understanding and adapting to the local cultural
is important international companies
 cross-cultural literacy - an understanding of how
cultural differences across and within nations can
affect the way in which business is practiced
 A relationship may exist between culture and the
costs of doing business in a country or region
 MNEs can be agents of cultural change
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What Is Culture?
 Culture - a system of values and norms that are
shared among a group of people and that when
taken together constitute a design for living
where
 values are abstract ideas about what a group believes
to be good, right, and desirable
 norms are the social rules and guidelines that
prescribe appropriate behavior in particular situations
 Society - a group of people who share a
common set of values and norms
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How Are Culture, Society,
And The Nation-State Related?
The relationship between a society and a
nation state is not strictly one-to-one
Nation-states are political creations
can contain one or more cultures
A culture can embrace several nations
the values and norms of a culture evolve over
time
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What Determines Culture?
Determinants of Culture
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What Is A Social Structure?
 Social structure - a society’s basic social
organization
 A group is an association of two or more people
who have a shared sense of identity and who
interact with each other in structured ways on
the basis of a common set of expectations about
each other’s behavior
 individuals are involved in families, work groups,
social groups, recreational groups, etc.
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What Is Social Stratification?
 All societies are stratified on a hierarchical
basis into social categories, or social strata
1.
2.
Social mobility - the extent to which individuals can
move out of the strata into which they are born
 caste system
 class system
The significance attached to social strata in business
contacts
 class consciousness
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How Do Religious And
Ethical Systems Differ?
 Religion - shared beliefs and rituals that are
concerned with the realm of the sacred
1.
2.
3.
4.
5.
Christianity
Islam
Hinduism
Buddhism
Confucianism influences behavior and culture
 Ethical systems - a set of moral principles, or
values, that are used to guide and shape
behavior
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What Is The Role
Of Language In Culture?
 Language - the spoken and unspoken
(nonverbal communication such as facial
expressions, personal space, and hand
gestures) means of communication
 Chinese is the mother tongue of the largest number of
people
 English is the most widely spoken language in the
world and is also becoming the language of
international business
 but, knowledge of the local language is still beneficial,
and in some cases, critical for business success
 failing to understand the nonverbal cues of another
culture can lead to communication failure
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What Is The Role
Of Education In Culture?
 Formal education is the medium through which
individuals learn many of the language,
conceptual, and mathematical skills that are
indispensable in a modern society
 important in determining a nation’s competitive
advantage
Japan’s postwar success can be linked to its
excellent education system
 general education levels can be a good index for the
kinds of products that might sell in a country
ex. impact of literacy rates
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How Does Culture
Impact The Workplace?
 Hofstede’s dimensions of culture:
1. Power distance - how a society deals with the
fact that people are unequal in physical and
intellectual capabilities
2. Uncertainty avoidance - the relationship
between the individual and his fellows
3. Individualism versus collectivism - the extent to
which different cultures socialize their
members into accepting ambiguous situations
and tolerating ambiguity
4. Masculinity versus femininity -the relationship
between gender and work roles
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How Does Culture
Impact The Workplace?
Work-Related Values for 20 Countries
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How Does Culture
Impact The Workplace?
Hofstede later expanded added a fifth
dimension called Confucian dynamism or
long-term orientation
captures attitudes toward time, persistence,
ordering by status, protection of face, respect
for tradition, and reciprocation of gifts and
favors
Japan, Hong Kong, and Thailand scored high on
this dimension
the U.S. and Canada scored low
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Does Culture Change?
Culture evolves over time
changes in value systems can be slow and
painful for a society
Social turmoil - an inevitable outcome of
cultural change
as countries become economically stronger,
cultural change is particularly common
economic progress encourages a shift from
collectivism to individualism
globalization also brings cultural change
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What Do Cultural Differences
Mean For Managers?
1. It is important to develop cross-cultural literacy
 companies that are ill informed about the practices
of another culture are unlikely to succeed in that
culture
2. There is a connection between culture and
national competitive advantage
 suggests which countries are likely to produce the
most viable competitors
 has implications for the choice of countries in which
to locate production facilities and do business
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